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Regulation and Mutual Funds

December 14, 2020

Part 1:  Regulation of the Banking Industry, Central Banking System, Moral Hazard and Adverse Selection Problems

General Questions:

Respond to the following questions thoroughly, in 150-300 words for each question.  Use your textbook, Financial Markets and Institutions by Frederic S. Mishkin and Stanley G. Eakins Eighth Edition, as your first and major reference.

 

  1. What was the focus of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010?  What are some of the criticisms of this Act?

 

  1. The United States was one of the last nations to establish a central banking system.  Why did it take so long to do so?  What is the scope of the regulatory authority of the Fed today and how does it compare to other central banks?

 

  1. What are moral hazard problems?  What are adverse selection problems? Give examples of each and how they can be addressed.

Deliverables:

  1. Be sure to explain your answers thoroughly, use specific examples.
  2. Needs to be in APA format with in-text citations, complete reference.
  3. Needs to be plagiarism free

 

Part 2:  Mutual Funds

Required:

Answer the following questions using a Microsoft Excel spreadsheet, and provide rationales for your responses. Use your textbook, Financial Markets and Institutions by Frederic S. Mishkin and Stanley G. Eakins Eighth Edition, as your first and major reference.

 

 

  1. What is a mutual fund? Are mutual funds considered a derivative security? Why or why not?

 

  1. Compare and contrast the difference between owning stocks and bonds directly and investing in a mutual fund. Describe the benefits and costs of each.

 

  1. What are the different types of mutual funds available and what are their goals or objectives?  Who regulates the mutual fund industry?

 

  1. What are the different risks to which the mutual fund shareholders are exposed?

 

  1. What is the difference between an open end fund and a closed end fund?

 

  1. What is the difference between a load fund and a no load fund?  From which of these funds would you expect the better performance?  Why?

 

  1. What is a hedge fund and how does it differ from other mutual funds?

 

  1. What is meant by the term net asset value?

 

  1. If a fund is set up as a load fund and it has a net asset value (NAV) of $20 and an offer price of $22, what is the value of the load commission?

 

  1. Assume that you purchased 200 shares of the fund described in question 9. At the end of 30 days, the value of the fund increased by 40 cents. What is your gain or loss? Justify your answer.

Deliverable:

  • Using a Microsoft Excel spreadsheet. Use good form, cite all sources (in-text and complete reference) using APA format, and show all your calculations and conclusions.
  • Needs to be plagiarism free

 

 

Assignment 2 Grading Criteria

Maximum Points

Correctly responded to questions 1-8 and justified each answer, 4 points each question.

32

Correctly calculated the value of the load commission.

5

Correctly calculated the gain or loss on the transaction and justified the answer.

5

Wrote in a clear and concise manner following APA standards, and demonstrated ethical scholarship in accurate representation of sources

8

Total:

50